Dax Technical Analysis 13/01/2016

Are we ready to reverse? I actually missed a key piece of technical evidence to support the bullish case yesterday and that can be found on the daily chart. We have a long-standing pitchfork, which began from 2009, that has been tested to the downside three times and the most recent time was within the last week.

I was expecting to reach somewhere nearer to 9560 to complete another leg down, but we have raced away and now actually closed above 10,000 again. If we are simply retracing the bearish week last week, then targets will be between 10133-10275. If we take out 10275, then we are primed to test 10350 and higher.

Dax Trade Setups

Bearish

We are still in a bearish trend and the current price movement could still be a pullback which would allow a decent selling opportunity from current levels. A sell from current levels with a stop above Friday high would be on some bearish radars.

A short entry from around 10240 would be in the prime retracement sell zone.

Bullish

A long from current levels 10050 with a stop under the recent low 9937 to target an extension of the recent swing can give us a target of 10245.

A break above 10093, which was the high for yesterday, can take us possibly higher towards 10245.

We may get a small pullback towards 10000 to allow buyers to get in at lower levels.

Dax Support & Resistance

KEY LEVELS

Daily R2

10291

Daily R1

10170

Daily Pivot

9973

Daily S1

9852

Daily S2

9655

200 Day SMA

10639

Dax Charts

Watch for a retracement of the candle from last week before continuing to head further down. Alternatively, watch for a reversal.01 Weekly Dax Chart

The pitchfork is a good opportunity to buy, we are at support. A crash through this pitchfork could signal a much wider economic meltdown02 Daily Dax Chart

Currently sat on the median line of the regression trend channel03 H4 Dax Chart

We have crossed above the 34 hour EMA which could signal bullish momentum has taken over05 m30 Dax Chart

We had an excellent rally in the early morning and then retraced 50% before closing just short of the daily high, this is bullish for me.09 m10 Dax Chart06 m5 Dax Chart

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We are in a range and with 11925 providing the base, it suggests that we can find some value here for short-term buying opportunities, assuming that it continues to hold. The base of this range is around the 50% retracement, which adds some strength to the pattern. There are currently no signals on this chart, but I am watching for either a break down to 11875 or a hold of 11925 and a move back up towards 12000.

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Bullish argument: Getting above 9700 may be seen by some traders as a break of the neckline of the mini head and shoulders pattern developing on the 30 minute chart. If this continues and we see a rally then 9852 is not unreasonable as this would be the 61.8 retracement from the March 23 high to the April 8 low. Stops above the 9900 high at the beginning of April will probably be a popular setup.

Bearish argument: We are still technically bearish and seeing a retracement, the ideal retracement zone is somewhere between 9770-9850 if current levels are broken. I am personally bearish at the moment.

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From a low leverage, swing trade perspective, shorting from current levels (or a gap higher in the morning) could be interesting with a stop around 10175 and target of 9550 based on us approaching the 200 day EMA, still failing to take out the 50% retracement level from the Dec/Feb swing and previous resistance from January. The 14 period daily Average True Range is around 215 points, so trade would offer an attractive risk:reward ratio.

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